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Q&A: Sachse sees shovels in ground in 2017

Detroit-based Sachse Construction is one of the most active construction contractors in downtown Detroit, having most recently completed the $65 million The Scott at Brush Park development with 199 apartments and first-floor retail space.

The company's CEO, Todd Sachse, spoke with Crain's reporter Kirk Pinho about his outlook for the downtown construction market next year.

What's your outlook for new construction in 2017?

I think there is going to be significant new construction starts in 2017 and beyond.

Talk a little about the labor market and costs for next year.

There's a different labor force other than the stadium (Little Caesars Arena). Now you are bringing in the structural people, site utilities, all that type of stuff where you're building the core and shell instead of renovating buildings. Some of those trades haven't been enjoying some of the stuff that others have. When the arena is finished, and it will be finishing up shortly, that's going to free up a lot of capacity in the market. I don't think there is going to be a significant increase in (construction) rates as a result of the work.

What's the basis for your prediction for more construction starts next year?

I don't think '17 is going to be a giant spike, but will continue at the pace we are seeing. We have more backlog this year than we ever have had in our history, and most contractors do. It's also a much more diverse backlog: There are a lot more players than there were in the last couple years. You could literally count on one hand the number of developers that were driving the vast amount of the work. I could name 10 developers and institutions, and that group probably did 90 percent of all the construction. Those 10 are still active, but there is another 50 that are much smaller but are adding to it. The types of projects that are going to be happening are also much more diverse. The reason why is because, at the beginning, there were only a handful of us that were believers. But there really are people that are moving downtown and thinking, "I really can buy that building and renovate it and find tenants." There are pioneers and there are settlers. We are just past the pioneering stage; all of us that have been here the last five years, some of us pioneers got arrows in our backs, but the settlers stayed. Pioneers have a much higher risk and reward and in most cases they get arrows in their back, but so far we haven't. And the pioneers want the settlers.

How about project locations?

The geography is expanding, which is great. I used to say my term was Woodward, plus or minus two (blocks to the east or west of it). It's something I've been saying the last five years. It's pretty much a guarantee and safe, from Warren to the river and plus or minus those two blocks. But that is expanding now. Corktown definitely is very real now. Lafayette Park is very real. There's stuff, real estate, announced on the east riverfront. There is a lot of talk now in the back rooms. You'll definitely see more in New Center.

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